In a move to reframe the financial landscape, the acting Governor of the Central Bank of Nigeria, Folashodun Shonubi, has unveiled plans to bestow a new identity upon the official foreign exchange market.
Formerly known as the Investors and Exporters (I&E) window, it will now bear the name of the Nigerian Foreign Exchange Market (NFEM), a symbol of unity and singular recognition.
Shonubi shared this transformative vision while delivering an insightful lecture titled “Diaspora Remittances and Nigeria Economic Development” to the esteemed members of the Executive Intelligence Management Course 16 at the National Institute for Security Studies, Abuja.
This revelation follows closely on the heels of the CBN’s recent move to dismantle segmentation within the foreign exchange market.
Converging all segments and rates into the I&E window, the apex bank cemented its status as the sole official forex market, streamlining operations for efficiency and coherence.
Introduced by the CBN in 2017, the I&E window is a haven for investors, exporters, and end-users to engage in forex trading.
Exchange rates are dynamically determined by prevailing market dynamics, fostering a platform for robust price discovery within the Nigerian foreign exchange sphere.
Shonubi’s said, “We will rename the foreign exchange market, known as the I & E market, to the Nigerian Foreign Exchange Market, as it is the sole market we acknowledge.”
The announcement followed the persistent turmoil in the foreign exchange realm, with the naira experiencing a record dip to N955/$1 in the parallel market.
Simultaneously, the I&E window witnessed trading at N781.34/$1, signaling a deepening liquidity crisis that spurred the CBN to address errant banking practices proactively.
Shonubi affirmed the CBN’s commitment to thwart any illicit activities by financial institutions and revealed a dedicated commission to conduct unannounced bank inspections, targeting any illicit forex sales.
Acknowledging the challenges faced by the Naira 4 Dollar scheme, aimed at channeling remittances through formal market channels, Shonubi highlighted the inherent complexity and discontinued the N5 rebate.
He underscored the value of incentives in fostering formal market participation.
In a related context, Shonubi attributed the devaluation of the naira and the inherent struggles within the forex market to the diversion of diaspora remittances towards unofficial platforms like the parallel market.
An alarming trend emerged, with many remittances landing in the parallel market due to a lack of official documentation.
Highlighting the risk posed by the unregulated parallel market, Shonubi illuminated its susceptibility to illicit activities, underscoring the urgency for a cohesive and transparent market ecosystem.